The High Court has continued chipping away at the iniquitous (as some see it) situation where an impecunious claimant can bring proceedings on a CFA without ATE insurance protection. So if the claimant wins, the costs are paid, if the claimant looses – too bad, the defendant is left to sing for their costs incurred in defeating the claim.

A number of defendants faced with this situation have chosen to go after the claimant’s solicitor for their costs on the basis that, in reality, the Claimant’s solicitor is ‘funding’ the claim (or at least the disbursements) and accordingly they can be held liable for the whole or part of the costs incurred in defeating the Claimant’s claim.

Heretofore the courts have been very reluctant to make any orders that the solicitors firms acting for Claimants pays the winning parties’ costs.

However, very slowly, one senses a change of direction from the senior courts. Most recently in GILL GERMANY v GAVIN FLATMAN : BARCHESTER HEALTHCARE LTD v RICHARD WEDDALL [2011] EWHC 2945 (QB) Mr Justice Eady, in a decision handed down on Thursday 10 November 2011, found in favour of the Defendants on an interim appeal. The Defendants had, at first instance, been refused an order requiring Claimant’s solicitors to disclose the two Claimants’ funding arrangements.

Eady J allowing the appeal made clear that although orders against non-parties were to be regarded as exceptional, that only meant outside the ordinary run of cases where parties pursued claims for their own benefit and at their own expense. The ultimate test was whether it was just in all the circumstances to make the order. A third party costs order could be made in circumstances where the funder was "a real party" not just "the real party". A solicitor would become a funder if he paid out sums on the basis that they would be recovered from the other side in the event of success, or not at all in the event of failure. A solicitor would then be providing funds in the way of business. Any funding role by a solicitor would only be countenanced if it carried with it the risk of having to pay the defendant's costs if he was ultimately successful. A disclosure order was necessary to establish what exactly had passed between a claimant and his solicitor.

This is a trend to watch, I think, and one for firms acting for Claimant’s on CFA’s without ATE insurance to bear in mind.